Standard: Look For More Exodus From Losing Gold ETP Positions
Money has flowed out of gold-backedexchange-traded products this month, and there may be more of this from losingpositions before gold prices can finally stabilize, says Suki Cooper,precious-metals analyst with Standard Chartered. ETPs trade like a stock buttrack the price of the commodity, with metal put into storage to back theshares. The amount of gold coming out of ETPs has reached 38 tonnes in Augustso far, swinging net year-to-date flows to an outflow of nine tonnes. “Around188t of ETF holdings accumulated since the start of 2017 became loss-makingwhen prices fell below 1,200/oz; loss-making positioning would rise to 223t ifprices fell below 1,150/oz,” Cooper says. “Investors have chosen to liquidateunprofitable positions rather than average down; as a result, most of theloss-making positions will need to be flushed out before prices can stabilize.”
By Allen Sykoraof Kitco News; asykora@kitco.com
RBC’s Gero:Bargain Hunting, Short Covering Lift Gold Prices
Monday August 20, 2018 09:48
Gold hasbounced from its recent sell-off, drawing both bargain hunting and shortcovering, says George Gero,managing director with RBC Wealth Management. As of 9:16 a.m. EDT, Comex December gold was $9.10 higherto $1,193.30 an ounce. Last week, the contract had bottomed at $1,167.10, itsweakest level since the beginning of 2017. Still,Gero says, there is potential for a “difficult week” for gold prices due to anexpected Federal Reserve rate hike next month, plus stronger equities thatmeans foreign investors have to buy U.S. dollars to pay for stocks (gold tendsto move inversely to the dollar). “Traders [have found] it has been too easy tobe short within a crowded trade as bear market in gold ensued soon after moredollar strength and tariffs were announced; however, event-driven rally orevent-driven selling meets opposites very soon,” he says. A key for gold at theend of the week will be a speech from Fed Chair Jerome Powell at a Fedsymposium in Jackson Hole, Gero adds.
By Allen Sykoraof Kitco News; asykora@kitco.com
StandardChartered: Gold Market Taking Direction From Currency Moves
Monday August 20, 2018 09:48
Currencymovements remain the key driver for gold prices, says Standard Chartered. Themetal tracks the U.S. dollar and Chinese yuan most closely, the bank says. Goldtends to move inversely to the U.S. currency, which has been strong lately.“Counter-intuitively, as risk aversion eases and the USD softens, gold pricesare more likely to stabilize in the near term,” Standard says.
By Allen SykoraFor Kitco News
Follow @AllenSykora
asykora@kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.